Monsanto boss could net $70 million from a Bayer takeover

Fri May 27, 2016 12:10pm EDT
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By Pamela Barbaglia, Tom Bergin and Anjuli Davies

LONDON (Reuters) - Monsanto boss Hugh Grant could land more than $70 million if the world's largest seed company is taken over by German chemicals giant Bayer AG (BAYGn.DE: Quote).

The U.S. firm said it was open to engaging in further negotiations with Bayer after turning down its $62 billion bid as "incomplete and financially inadequate" this week.

That $122-per-share offer would allow CEO and Chairman Grant to walk away with a total package of more than $123 million after a takeover, including from the sale of shares and the exercise of options he already owned, a Reuters analysis of Monsanto filings shows.

But $73.5 million of that represents gains the 58-year-old Scot could make as a result of the Bayer courtship, largely thanks to increases in the value of his stock options.

The gains also reflect the rise in the value of his shareholdings and accelerated payout of bonuses that would occur if there is a takeover, as well as a $14.5 million "golden parachute" severance payment he would receive if he loses his job as a result.

There is no certainty that ongoing negotiations will result into a deal although Monsanto's board has signaled interest in reaching an accord with Bayer. Grant, who is eligible for retirement, said his company firmly endorsed "the substantial benefits an integrated strategy could provide to growers and broader society" after the bid was snubbed on Tuesday.

Even should a deal be struck, it is not certain that Grant would be ousted. But in most takeovers, the CEOs of the targets tend to exit after their companies are sold. The agrochemicals mega-deal between Dow Chemical (DOW.N: Quote) and Dupont (DD.N: Quote) agreed in December - an unusual case because it was billed as a "merger of equals" of two companies of roughly equal size - will see both CEOs depart.

Grant's exposure to shares and options means he has an incentive to hold out for the highest possible sale price in any deal, which would not only be in the interests of shareholders but also increase the value of his holdings. A $130-per-share bid, for example, would lift his holdings by another $12 million, the Reuters analysis shows.   Continued...

Hugh Grant, Chairman and CEO of Monsanto, participates in a panel discussion at the 2015 Fortune Global Forum in San Francisco, California November 3, 2015. REUTERS/Elijah Nouvelage/File Photo